If you’ve been saving up for your own place and you’re finally feeling ready to take the next step, you may be wondering where to start.
It’s not uncommon for first time buyers to head straight to the bank they hold their current account with and apply for a mortgage through them. However, I honestly think this is the worst thing you could do. The wooooorst!
Here are 3 reasons it’s wise to use a mortgage broker rather than going straight to your bank…
1. They’ll potentially save you thousands of pounds
While your existing bank may seem familiar and comfortable, they will only be able to offer you their own mortgage products rather than products from across the market.
With thousands of mortgages on the market, going straight to your bank could see you missing out on really amazing deals.
Whereas if you compare dozens or hundreds of mortgages, you may save yourself tens of thousands over the course of your mortgage term.
Working out the ‘true cost’ of your mortgage
When comparing different mortgages, there are a number of things to take into account. The interest rate is perhaps the most significant, but there are other costs to take into consideration such as fees and cashback offers.
While some mortgages may offer a generous cashback offer, their interest rate might not be as good as a rival mortgage deal. So working out which mortgage is truly the best can require a bit of maths.
This is where a mortgage broker comes in handy. A broker will compare countless mortgage products on your behalf and they’ll work out which ones are the cheapest, so you don’t have to.
Brokers will often have access to better deals than price comparison sites
Some people choose to use price comparison websites instead of using a broker. Although I think this is certainly a better alternative to going straight to your bank, mortgage brokers tend to have access to specialist deals that aren’t available through price comparison websites or via lenders directly.
How much can a different interest rate save me?
Here’s an example of how much difference a little bit of interest can make to the amount of money you’ll save:
Lender A
Lender A offers to give you a mortgage of £200,000 over a period of 30 years at an interest rate of 3.5%.
When we add the mortgage debt to the amount of interest you’ll pay over the course of the 30 years, this’ll see you repaying a grand total of £323,440.
However, let’s look at what Lender B could offer…
Lender B
Lender B offers to give you mortgage of £200,000 over a period of 30 years at an interest rate of 3%. This might not seem like a huge difference to Lender A’s offering but…
When we add the mortgage debt to the amount of interest you’ll pay over the course of the 30 years, this’ll see you repaying £303,495.
So if you opt for Lender B’s mortgage instead of what Lender A is offering, you’ll make a huge saving of £19,945!!!
This is why it’s really important to compare as many mortgages as possible to find the absolute best one for you.
I know it might be tempting to settle for whatever your bank will offer you, but trust me when I say you deserve more! Think about all the things you could spend the money on. The best part is that since interest rates are so low right now, you could potentially get a better mortgage deal than the examples I’ve given above. It all depends on your circumstances. This leads me onto the second reason to use a mortgage broker…
2. They’ll increase your chances of overcoming common mortgage obstacles
If you’re self-employed, you have an imperfect credit rating, a small deposit, or you’re on a modest income, you may find it harder than others to get a mortgage. There’s a risk you could approach your current bank get rejected or offered a higher interest rate than necessary.
Thankfully, a mortgage broker will take a look at your financial situation before highlighting the lenders most likely to approve your application, while steering you away from the fussier lenders with strict policies.
You might be wondering: “Isn’t it worth just applying for whatever mortgage I want and hoping for the best?” But believe it or not, this is the worst thing you could do. If you get rejected by a lender, this can make it more difficult to get a ‘yes’ from other lenders. It’s one vicious spiral.
So with the help of a broker, you can gain insider knowledge into which lenders are most likely to give you the money you need, without hindering your chances in the process.
To learn more about buying your first home, take a look at Can’t Swing a Cat’s first time buyer blog section.
3. Mortgage brokers can guide you through the whole process
This third perk is particularly helpful for first time buyers with no experience when it comes to the home buying process. It’s only natural to feel a little clueless when this is your first time buying a property and mortgage brokers know how daunting it can be. That’s why they’ll take much of the workload off your hands and guide you through the whole process.
If I’ve managed to convince you to use a mortgage broker, you might be wondering where to find one. Thankfully, I’ve created a guide for that too. Take a look at my post: How To Find A Mortgage Broker You Can Trust
